Senate could reverse billions of dollars of cuts to Israeli defense sector

An amendment from Sen. Lindsey Graham would allow Israel to continue using US military financing on its own domestic industry.

REUTERS/Ammar Awad

An Israeli air force F-16 fighter plane flies above a traffic sign after taking off for a mission in Lebanon from a base in northern Israel, July 20, 2006.

The Senate could vote this week on a provision that would undo a key aspect of the military agreement with Israel negotiated last year under former President Barack Obama.

Sen. Lindsey Graham, R-S.C., has filed an amendment to the annual defense bill that would allow Israel to continue to spend more than a quarter of US military assistance to buy equipment from domestic, rather than US, firms. The amendment would represent a payday of more than $8.5 billion for the Israeli defense sector, but some critics say it would put the entire 10-year, $38 billion agreement in jeopardy.

Under last year’s memorandum of understanding for fiscal years 2019 through 2028, Israel would get $33 billion in foreign military financing and $5 billion for missile defense assistance, up from $31 billion in foreign military financing currently. In exchange, however, Israel would lose a special privilege that had allowed it to use 26.3% of its foreign military financing assistance domestically on non-US firms. Graham’s amendment would reinstate that so-called off-shore procurement rate.

At the time the deal was signed, the Obama administration argued that requiring Israel to use 100% of its foreign military financing funds on US weapons and defense systems would make Israel more secure.

“The acquisition of additional US-produced capabilities and technology provide the best means to ensure Israel preserves its Qualitative Military Edge,” the White House said in a fact sheet at the time.

Graham declined to comment about his amendment, which is not certain to come up as the Senate debates the annual must-pass defense bill this week. However, his close friend and ally John McCain, R-Ariz., chairs the Senate Armed Services Committee and therefore exercises considerable influence on floor action.

Obama’s former ambassador to Israel, Daniel Shapiro, defended the memorandum of understanding when asked about Graham’s amendment, noting that the agreement would phase out off-shore procurement gradually.

“It’s a win for jobs in the US defense industry and it gives ample time for the now very mature Israeli defense industry and military budget planners to adjust to the change,” Shapiro, currently a senior fellow at the Institute for National Security Studies in Tel Aviv, told Al-Monitor.

Even though the memorandum of understanding increases the total amount of US military assistance for Israel, Graham criticized the agreement last year immediately after it was finalized. The senator argued that Israel “left money on the table” and that it could have gotten a better deal after Obama left office. The deal also requested that Israel not lobby Congress for additional funding beyond what was agreed to in the new memorandum of understanding.

Shapiro argued that the Graham amendment opens the door for Congress to revisit the entire agreement.

“If Congress chooses to rewrite portions of the MOU [memo of understanding], any provision of the MOU could be called into question,” said Shapiro. “That undercuts the stability of US defense assistance to Israel that the MOU was meant to provide.”

Bryant Harris is Al-Monitor's congressional correspondent. He was previously the White House assistant correspondent for Yomiuri Shimbun, Japan's largest newspaper. He has also written for Foreign Policy, Al Jazeera English and IPS News. Prior to his stint in DC, he spent two years as a US Peace Corps volunteer in Morocco. On Twitter: @brykharris_ALM, Email: bharris@al-monitor.com.